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Shares of RIO are up over 1.5%, and have reached a two-month high at $79.40 as the mining giant announced solid growth in shipments across their mineral lines.
The company announced that shipments of Iron Ore from their Pilbara mines rose by 5% along with increased shipments of copper and bauxite.
Our ALGO engine triggered a buy signal in RIO on March 29th at $72.30.
And while the internal momentum indicators look positive, investors should be aware of a potential “triple-top” pattern in the $82.50 price area.
Rio Tinto
Our Algo Engine generated a sell signal back in February when BOQ was trading at $13.00. The stock closed yesterday at $10.66.
Bank of Queensland 1H18 earnings missed consensus by around 5%. Net profit after tax came in at $182 million and would have been much lower, if it was not for lower than expected bad and doubtful debt provisioning.
The result highlights quality concerns over underlying profitability.
With the stock trading on a 7%+ fully franked dividend, sell-offs will be met with some buying interest.
However, earnings headwinds and a down-turn in the credit cycle, suggests future “short” or sell signals from our Algo Engine are the preferred directional trades.
BoQ
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Bank of America reported a 34% rise in first-quarter profit last night, topping Wall Street estimates, as the bank benefited from higher interest rates and growth in loans and deposits.
However, BAC under-performed in fixed income, currency and commodities (FICC) trading because of a decline in bond issuance from corporations.
Trading revenue was up only 1%. Equities trading revenue, excluding items, rose 38%, while revenue from trading fixed income fell 13%.
BAC’s trading results mirrored those of rivals JP Morgan and Citigroup; revenue from stock trading rose at both the banks, but weakness in bond trading crimped total trading revenue growth, which is why their share prices remain soft.
To a large degree, the local banks face the same headwinds but with the added risk of the Royal Bank commission.
Hearings from the commission are back on this week with QBE and SUN included in the questioning over insurance related business practices.
Our ALGO engine triggered a sell signal late last year in both QBE and SUN at $10.40 and $14.05, respectfully.
We remain cautious of the local banking names and see the risk continue to be skewed to the downside, especially in the regional names like BOQ and BEN.
QBE
SUNCORP
BoQ
Bendigo Bank
Over the past year, Perpetual has experienced $3 billion in net outflows from its Australian Equities funds, equivalent to -13% of assets under management (AUM).
With the stock price down over 20% following the recent ALGO sell signal, we look for the the $37 – $41 range as new buying support.
Transurban has recently entered into a number of significant transactions, including the $4billion Westgate Tunnel Project, which will help underpin earnings growth of 10% over the next 3 years.
The EBIT growth will flow through to DPS growth of 10% and we see the FY18 DPS of $0.56 increasing to $0.70 in FY21, placing the stock on an attractive forward yield of 6%.
We recommend investors enhance the yield further, by selling a covered call option. A combination of the dividend and the option premium is generating 12% annualised cash flow.
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The price of West Texas Intermediate Crude Oil (WTI) posted its largest weekly advance in over four years.
The 9% gain for the week in WTI also lifted the local oil names, including OSH, STO and WPL
Our ALGO engine triggered a buy signal in OSH on February 13th at $7.10.
At the time, our initial upside target was at $7.70.
With today’s high posting of $7.75, We can see the logic in taking profits in OSH and rotating into WPL.
Taking into account the sharp selloff after announcing a capital raising on February 2nd, we consider WPL a better long-term value in the oil sector.
Oil Search
Woodside Petroleum
Shares of ORG have a stable outlook, but are approaching an overbought condition relative to its fundamentals.
A mild Summer combined with reduced weather related events has seen a drop in demand which could act as a headwind to significantly higher share prices.
Our ALGO engine triggered a buy signal for ORG on February 13th at $8.30. Since then, the share price has run into resistance twice at $9.40.
We suggest that investors can look to sell the $9.50 calls to increase cash-flow enhance overall portfolio returns.
Origin Energy
Level 29 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453
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